The destiny of the world economy is run by lasers. The economy crumbled and this shit is still legal. The deviance of the free markets continues despite the crash and suffering: how the short-trading looks like. Nowadays, the majority of orders for US and European shares and futures (and increasing proportions of the orders for bonds and foreign exchange) are generated by computer systems which are themselves often located in the data centre that processes them. High-frequency trading firms – and also, for example, the big banks that act as brokers for institutional investors – pay the exchanges or other data centre owners for space in which to place their computer servers. ... An institutional investor will set a goal for the computer programs of a bank executing orders on its behalf, for example to buy a hundred thousand Apple shares. If the programs immediately and visibly placed the whole order in the electronic order books of the exchanges on which Apple shares are traded, it would drive up their price sharply. So the bank’s programs (its ‘smart order router’ and its ‘execution algorithms’) split the ‘parent’ order into up to a thousand ‘child’ orders and execute them as surreptitiously as possible, often trying to make them look like large numbers of independent orders from small investors. The order router will usually at first send child orders to ‘dark pools’ (which are not exchanges, but trading venues in which participants, whether human or algorithmic, cannot see the electronic order books). If the router then has to send child orders to exchanges such as BATS, Direct Edge, Nasdaq or the New York Stock Exchange – in which order books are visible – it will keep them small and therefore hopefully inconspicuous, buying or selling as few as a hundred Apple shares (or even fewer) at a time. All this splitting and routing of a big order is complicated but easily automated. It is of course far cheaper to have computer systems do all of this than to pay human traders. lrb.co.uk/v36/n17/donald-mackenzie/be-grateful-for-drizzle
Posted on: Fri, 05 Sep 2014 06:43:15 +0000
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